[thelist] development time cost on new functionality

Matt Warden mwarden at gmail.com
Mon Jul 18 23:22:41 CDT 2011

On Mon, Jul 18, 2011 at 10:36 PM, Ken Schaefer <Ken at adopenstatic.com> wrote:
>> Does Ford sell the second car it produces at slightly less? Does Pfizer sell the second bottle of pills at slightly less?
> Does Ford sell the first car at the $2bn it costs to recoup all its R&D effort? No. It amortises the cost across the entire expected sales of the product.

No, that is really not what Ford is doing, and I'd be happy to explain
offlist. In this thread, we are indeed talking about a scenario where
the "R&D" was funded wholly by the initial sale. Are you drawing some
on-topic point, or just taking an opportunity to highlight that my
analogy wasn't 100%?

I would not beat a dead horse here, but far too many services folks
leave money on the table every day in such scenarios, and I don't see
how your reply helps remedy that. In fact, it seems counterproductive,
as you seem to be suggesting that the price should drop on second
sale, or if you have foresight that there will be a second sale, you
should charge your first customer less than they are willing to pay
you. Both of these options are driven by emotion, not logic. And it is
thinking like this that makes our programmer brethren poorer.


Matt Warden

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